India Insurance Brokers Warn IRDAI Over Proposed Commission Caps

The Insurance Brokers Association of India (IBAI) has cautioned the Insurance Regulatory and Development Authority of India (IRDAI) that proposed distribution reforms could trigger widespread job losses and reduce insurance accessibility in smaller towns. The association's concerns stem from an IRDAI consultation paper proposing more than 30 separate commission caps based on products and channels, alongside a reduction of over 30 percent in insurers' overall expense of management limits over five years.

Representing 798 licensed brokers, the IBAI argues that these caps could make it commercially unviable to maintain distribution networks in Tier-2 and Tier-3 cities. The association warns that such a shift could impact 14.81 lakh point-of-sale persons and weaken the ability of brokers to support customers during claims. While the IBAI supports the goals of protecting policyholders and curbing mis-selling, it contends that the reforms may hinder the national objective of achieving "Insurance for All by 2047."

The IBAI has urged the regulator to maintain the 2023 expense-of-management framework and conduct a regulatory impact assessment before drafting new regulations. The association suggests limiting commission caps specifically to credit-linked or coerced-choice sales and plans to submit a detailed response to the IRDAI by October 25, 2026.